With all the talk about Amazons's 2nd Headquarters campaign and where that project will land, it seems appropriate to examine the economic impact of the less lofty Amazon distribution center. These smaller projects from Amazon are often highly contested, with counties and cities fighting to offer the best incentive package to land the included jobs as part of an economic development initiative.
A new study of publicly available data by the left-leaning Economic Policy Institute has found that when Amazon opens a new warehouse, the county where it is located does not see an increase in employment during the following two-year period. Warehouse jobs do increase by about 30%, but the county's overall employment stays steady. More detail below:
Amazon has opened fulfillment centers in 25 states, often courting state or local tax incentives to build them. The study suggests that these localities are not getting a return on that investment, one of the study's authors, Ben Zipperer
In fact, the study found that if anything, employment actually decreases two years after Amazon opens a fulfillment center in a county, though not to a statistically significant degree.
EPI used data from the Bureau of Labor Statistics that included warehousing employment figures in 1,161 counties around the US. That includes 54 Amazon warehouses in 34 counties, accounting for about 75% of all Amazon fulfillment centers.
The study also found that average warehouse wages, based on total wages, do not increase when Amazon opens a warehouse in a county. That could be because Amazon hires a mix of part-time or hourly and salaried employees, keeping overall wages down. A separate study released in January found that 700 Amazon employees in Ohio — about 10% of Amazon's workforce in the state — drew benefits from foot stamps.
As you would expect, Amazon disputed the findings of the EPI study in a statement:
In addition to the 200,000 Amazon employees in the US, we know from 2016 data, which is more current than the EPI data, Amazon's investments led to the creation of 200,000 additional non-Amazon jobs, ranging from construction jobs to healthcare industry positions. In fact, over the last five years, counties that have received Amazon investment have seen the unemployment rate drop by 4.8 percentage points on average, and in some areas, the rate has been lower than the state average.
The study, Amazon said, focused on a "misleading" section of time (2001 to 2015) that included both the recession and a time when Amazon was not building warehouses at the clip it is now.
Is anyone really surprised that counties and cities may overpay for an Amazon Distribution Center project? You're damned if you do and damned if you don't. Fail to secure the project and be positioned as the county commissioner who never brought a name project to your county. Overpay, and wait for it - no one with the exception of the academics - really evaluates whether the project paid off or not.
Amazon continues to win. Government officials in charge of economic development and job growth, take heed...